By Njeri Irungu.
Kenyan legislators and private sector leaders have pledged to work together to create a more predictable and business-friendly fiscal environment, during a high-level meeting held at Windsor Golf Hotel in Kiambu County on April 25, 2025.
The joint retreat brought together members of Parliament’s Finance and National Planning, Budget and Appropriations, and Trade, Industry & Cooperatives committees with representatives from the Kenya Private Sector Alliance (KEPSA). The discussions focused on improving tax policies, enhancing investment confidence, and positioning Kenya as a competitive player in the global economy ahead of the Finance Bill 2025.
In his address, the Chairperson of the Finance and National Planning Committee stressed the importance of fiscal stability in attracting long-term investments. He acknowledged that uncertainty in tax measures and delays in VAT refunds have been major concerns for businesses, both local and foreign. To address these challenges, he proposed key reforms, including enforcing time-bound VAT refunds, simplifying tax procedures for small and medium enterprises (SMEs), and ensuring clearer tax legislation to minimize disputes.
Recent amendments to the VAT Act were highlighted as positive steps. These changes include clearer rules on the taxation of exported goods, the removal of restrictive input tax deduction rules, and new provisions allowing businesses to claim relief on excess VAT credits caused by policy shifts.
KEPSA Chair Dr. Jas Bedi emphasized the private sector’s critical role in Kenya’s economy, noting that it contributes over 70% of GDP and employs more than 80% of the workforce. However, he warned that unpredictable fiscal policies and complex tax systems continue to hinder growth. He called for policies that reduce operational costs, support local industries, and expand access to affordable credit for SMEs.
The meeting also addressed the need to safeguard Kenya’s economy from global disruptions. Lawmakers proposed measures such as adjusting tariffs to protect local manufacturers, strengthening regional trade under the African Continental Free Trade Area (AfCFTA), and further digitizing tax collection to improve efficiency.
As the retreat concluded, participants agreed on key next steps, including incorporating private-sector input into the drafting of the Finance Bill 2025, establishing structured dialogue mechanisms for ongoing collaboration, and ensuring that fiscal policies balance revenue needs with business growth.
The National Treasury projects Kenya’s economy to grow by 5.3% in 2025, driven by agriculture, services, and digital transformation. However, challenges such as rising poverty, unemployment, and income inequality remain pressing concerns that require coordinated policy responses.
Both legislators and private sector leaders expressed optimism that sustained collaboration would lead to a more stable and competitive economic environment, ultimately benefiting businesses and households across the country.
